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A JOINT RESOLUTION
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proposing a constitutional amendment providing that a residence |
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homestead is not subject to seizure or sale for delinquent ad |
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valorem taxes. |
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BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 13(a), (c), and (d), Article VIII, |
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Texas Constitution, are amended to read as follows: |
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(a) Except as provided by Section 15(b) of this article, |
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provision [Provision] shall be made by the Legislature for the sale |
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of a sufficient portion of all lands and other property for the |
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taxes due thereon that have not been paid. |
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(c) The former owner of [a residence homestead,] land |
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designated for agricultural use[,] or a mineral interest sold for |
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unpaid taxes shall within two years from date of the filing for |
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record of the Purchaser's Deed have the right to redeem the property |
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on the following basis: |
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(1) Within the first year of the redemption period, |
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upon the payment of the amount of money paid for the property, |
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including the Tax Deed Recording Fee and all taxes, penalties, |
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interest, and costs paid plus an amount not exceeding 25 percent of |
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the aggregate total; and |
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(2) Within the last year of the redemption period, |
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upon the payment of the amount of money paid for the property, |
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including the Tax Deed Recording Fee and all taxes, penalties, |
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interest, and costs paid plus an amount not exceeding 50 percent of |
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the aggregate total. |
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(d) If the [residence homestead or] land designated for |
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agricultural use is sold pursuant to a suit to enforce the |
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collection of the unpaid taxes, the Legislature may limit the |
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application of Subsection (c) of this section to [property used as a |
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residence homestead when the suit was filed and to] land designated |
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for agricultural use when the suit was filed. |
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SECTION 2. Section 15, Article VIII, Texas Constitution, is |
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amended to read as follows: |
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Sec. 15. (a) Except as provided by Subsection (b) of this |
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section, the [The] annual assessment made upon landed property |
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shall be a special lien thereon; and all property, both real and |
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personal, belonging to any delinquent taxpayer shall be liable to |
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seizure and sale for the payment of all the taxes and penalties due |
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by such delinquent; and such property may be sold for the payment of |
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the taxes and penalties due by such delinquent, under such |
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regulations as the Legislature may provide. |
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(b) A residence homestead is not subject to seizure or sale |
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for the payment of delinquent taxes or penalties. The Legislature |
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by general law may define residence homestead for purposes of this |
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subsection. |
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SECTION 3. Sections 50(a), (e), (f), (f-1), (g), (h), (i), |
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(j), (k), (q), (r), (t), and (u), Article XVI, Texas Constitution, |
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are amended to read as follows: |
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(a) The homestead of a family, or of a single adult person, |
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shall be, and is hereby protected from forced sale, for the payment |
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of all debts except for: |
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(1) the purchase money thereof, or a part of such |
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purchase money; |
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(2) [the taxes due thereon; |
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[(3)] an owelty of partition imposed against the |
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entirety of the property by a court order or by a written agreement |
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of the parties to the partition, including a debt of one spouse in |
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favor of the other spouse resulting from a division or an award of a |
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family homestead in a divorce proceeding; |
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(3) [(4)] the refinance of a lien against a homestead, |
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including a federal tax lien resulting from the tax debt of both |
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spouses, if the homestead is a family homestead, or from the tax |
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debt of the owner; |
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(4) [(5)] work and material used in constructing new |
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improvements thereon, if contracted for in writing, or work and |
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material used to repair or renovate existing improvements thereon |
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if: |
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(A) the work and material are contracted for in |
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writing, with the consent of both spouses, in the case of a family |
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homestead, given in the same manner as is required in making a sale |
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and conveyance of the homestead; |
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(B) the contract for the work and material is not |
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executed by the owner or the owner's spouse before the fifth day |
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after the owner makes written application for any extension of |
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credit for the work and material, unless the work and material are |
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necessary to complete immediate repairs to conditions on the |
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homestead property that materially affect the health or safety of |
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the owner or person residing in the homestead and the owner of the |
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homestead acknowledges such in writing; |
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(C) the contract for the work and material |
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expressly provides that the owner may rescind the contract without |
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penalty or charge within three days after the execution of the |
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contract by all parties, unless the work and material are necessary |
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to complete immediate repairs to conditions on the homestead |
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property that materially affect the health or safety of the owner or |
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person residing in the homestead and the owner of the homestead |
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acknowledges such in writing; and |
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(D) the contract for the work and material is |
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executed by the owner and the owner's spouse only at the office of a |
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third-party lender making an extension of credit for the work and |
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material, an attorney at law, or a title company; |
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(5) [(6)] an extension of credit that: |
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(A) is secured by a voluntary lien on the |
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homestead created under a written agreement with the consent of |
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each owner and each owner's spouse; |
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(B) is of a principal amount that when added to |
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the aggregate total of the outstanding principal balances of all |
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other indebtedness secured by valid encumbrances of record against |
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the homestead does not exceed 80 percent of the fair market value of |
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the homestead on the date the extension of credit is made; |
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(C) is without recourse for personal liability |
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against each owner and the spouse of each owner, unless the owner or |
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spouse obtained the extension of credit by actual fraud; |
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(D) is secured by a lien that may be foreclosed |
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upon only by a court order; |
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(E) does not require the owner or the owner's |
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spouse to pay, in addition to any interest or any bona fide discount |
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points used to buy down the interest rate, any fees to any person |
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that are necessary to originate, evaluate, maintain, record, |
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insure, or service the extension of credit that exceed, in the |
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aggregate, two percent of the original principal amount of the |
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extension of credit, excluding fees for: |
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(i) an appraisal performed by a third party |
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appraiser; |
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(ii) a property survey performed by a state |
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registered or licensed surveyor; |
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(iii) a state base premium for a mortgagee |
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policy of title insurance with endorsements established in |
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accordance with state law; or |
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(iv) a title examination report if its cost |
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is less than the state base premium for a mortgagee policy of title |
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insurance without endorsements established in accordance with |
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state law; |
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(F) is not a form of open-end account that may be |
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debited from time to time or under which credit may be extended from |
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time to time unless the open-end account is a home equity line of |
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credit; |
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(G) is payable in advance without penalty or |
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other charge; |
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(H) is not secured by any additional real or |
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personal property other than the homestead; |
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(I) (repealed); |
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(J) may not be accelerated because of a decrease |
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in the market value of the homestead or because of the owner's |
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default under other indebtedness not secured by a prior valid |
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encumbrance against the homestead; |
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(K) is the only debt secured by the homestead at |
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the time the extension of credit is made unless the other debt was |
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made for a purpose described by Subsections (a)(1)-(a)(4) |
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[(a)(1)-(a)(5)] or Subsection (a)(7) [(a)(8)] of this section; |
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(L) is scheduled to be repaid: |
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(i) in substantially equal successive |
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periodic installments, not more often than every 14 days and not |
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less often than monthly, beginning no later than two months from the |
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date the extension of credit is made, each of which equals or |
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exceeds the amount of accrued interest as of the date of the |
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scheduled installment; or |
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(ii) if the extension of credit is a home |
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equity line of credit, in periodic payments described under |
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Subsection (t)(8) of this section; |
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(M) is closed not before: |
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(i) the 12th day after the later of the date |
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that the owner of the homestead submits a loan application to the |
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lender for the extension of credit or the date that the lender |
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provides the owner a copy of the notice prescribed by Subsection (g) |
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of this section; |
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(ii) one business day after the date that |
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the owner of the homestead receives a copy of the loan application |
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if not previously provided and a final itemized disclosure of the |
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actual fees, points, interest, costs, and charges that will be |
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charged at closing. If a bona fide emergency or another good cause |
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exists and the lender obtains the written consent of the owner, the |
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lender may provide the documentation to the owner or the lender may |
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modify previously provided documentation on the date of closing; |
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and |
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(iii) the first anniversary of the closing |
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date of any other extension of credit described by Subsection |
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(a)(5) [(a)(6)] of this section secured by the same homestead |
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property, except a refinance described by Paragraph (Q)(x)(f) of |
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this subdivision, unless the owner on oath requests an earlier |
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closing due to a state of emergency that: |
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(a) has been declared by the president |
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of the United States or the governor as provided by law; and |
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(b) applies to the area where the |
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homestead is located; |
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(N) is closed only at the office of the lender, an |
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attorney at law, or a title company; |
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(O) permits a lender to contract for and receive |
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any fixed or variable rate of interest authorized under statute; |
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(P) is made by one of the following that has not |
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been found by a federal regulatory agency to have engaged in the |
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practice of refusing to make loans because the applicants for the |
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loans reside or the property proposed to secure the loans is located |
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in a certain area: |
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(i) a bank, savings and loan association, |
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savings bank, or credit union doing business under the laws of this |
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state or the United States, including a subsidiary of a bank, |
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savings and loan association, savings bank, or credit union |
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described by this subparagraph; |
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(ii) a federally chartered lending |
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instrumentality or a person approved as a mortgagee by the United |
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States government to make federally insured loans; |
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(iii) a person licensed to make regulated |
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loans, as provided by statute of this state; |
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(iv) a person who sold the homestead |
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property to the current owner and who provided all or part of the |
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financing for the purchase; |
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(v) a person who is related to the homestead |
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property owner within the second degree of affinity or |
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consanguinity; or |
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(vi) a person regulated by this state as a |
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mortgage banker or mortgage company; and |
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(Q) is made on the condition that: |
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(i) the owner of the homestead is not |
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required to apply the proceeds of the extension of credit to repay |
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another debt except debt secured by the homestead or debt to another |
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lender; |
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(ii) the owner of the homestead not assign |
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wages as security for the extension of credit; |
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(iii) the owner of the homestead not sign |
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any instrument in which blanks relating to substantive terms of |
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agreement are left to be filled in; |
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(iv) the owner of the homestead not sign a |
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confession of judgment or power of attorney to the lender or to a |
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third person to confess judgment or to appear for the owner in a |
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judicial proceeding; |
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(v) at the time the extension of credit is |
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made, the owner of the homestead shall receive a copy of the final |
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loan application and all executed documents signed by the owner at |
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closing related to the extension of credit; |
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(vi) the security instruments securing the |
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extension of credit contain a disclosure that the extension of |
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credit is the type of credit defined by Subsection (a)(5) [(a)(6)] |
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of this section; |
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(vii) within a reasonable time after |
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termination and full payment of the extension of credit, the lender |
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cancel and return the promissory note to the owner of the homestead |
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and give the owner, in recordable form, a release of the lien |
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securing the extension of credit or a copy of an endorsement and |
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assignment of the lien to a lender that is refinancing the extension |
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of credit; |
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(viii) the owner of the homestead and any |
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spouse of the owner may, within three days after the extension of |
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credit is made, rescind the extension of credit without penalty or |
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charge; |
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(ix) the owner of the homestead and the |
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lender sign a written acknowledgment as to the fair market value of |
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the homestead property on the date the extension of credit is made; |
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(x) except as provided by Subparagraph (xi) |
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of this paragraph, the lender or any holder of the note for the |
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extension of credit shall forfeit all principal and interest of the |
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extension of credit if the lender or holder fails to comply with the |
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lender's or holder's obligations under the extension of credit and |
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fails to correct the failure to comply not later than the 60th day |
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after the date the lender or holder is notified by the borrower of |
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the lender's failure to comply by: |
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(a) paying to the owner an amount |
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equal to any overcharge paid by the owner under or related to the |
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extension of credit if the owner has paid an amount that exceeds an |
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amount stated in the applicable Paragraph (E), (G), or (O) of this |
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subdivision; |
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(b) sending the owner a written |
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acknowledgement that the lien is valid only in the amount that the |
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extension of credit does not exceed the percentage described by |
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Paragraph (B) of this subdivision, if applicable, or is not secured |
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by property described under Paragraph (H) of this subdivision, if |
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applicable; |
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(c) sending the owner a written notice |
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modifying any other amount, percentage, term, or other provision |
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prohibited by this section to a permitted amount, percentage, term, |
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or other provision and adjusting the account of the borrower to |
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ensure that the borrower is not required to pay more than an amount |
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permitted by this section and is not subject to any other term or |
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provision prohibited by this section; |
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(d) delivering the required documents |
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to the borrower if the lender fails to comply with Subparagraph (v) |
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of this paragraph or obtaining the appropriate signatures if the |
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lender fails to comply with Subparagraph (ix) of this paragraph; |
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(e) sending the owner a written |
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acknowledgement, if the failure to comply is prohibited by |
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Paragraph (K) of this subdivision, that the accrual of interest and |
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all of the owner's obligations under the extension of credit are |
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abated while any prior lien prohibited under Paragraph (K) remains |
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secured by the homestead; or |
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(f) if the failure to comply cannot be |
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cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the |
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failure to comply by a refund or credit to the owner of $1,000 and |
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offering the owner the right to refinance the extension of credit |
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with the lender or holder for the remaining term of the loan at no |
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cost to the owner on the same terms, including interest, as the |
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original extension of credit with any modifications necessary to |
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comply with this section or on terms on which the owner and the |
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lender or holder otherwise agree that comply with this section; and |
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(xi) the lender or any holder of the note |
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for the extension of credit shall forfeit all principal and |
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interest of the extension of credit if the extension of credit is |
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made by a person other than a person described under Paragraph (P) |
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of this subdivision or if the lien was not created under a written |
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agreement with the consent of each owner and each owner's spouse, |
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unless each owner and each owner's spouse who did not initially |
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consent subsequently consents; |
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(6) [(7)] a reverse mortgage; or |
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(7) [(8)] the conversion and refinance of a personal |
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property lien secured by a manufactured home to a lien on real |
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property, including the refinance of the purchase price of the |
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manufactured home, the cost of installing the manufactured home on |
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the real property, and the refinance of the purchase price of the |
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real property. |
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(e) A refinance of debt secured by a homestead and described |
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by any subsection under Subsections (a)(1)-(a)(4) of this section |
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[(a)(1)-(a)(5)] that includes the advance of additional funds may |
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not be secured by a valid lien against the homestead unless: |
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(1) the refinance of the debt is an extension of credit |
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described by Subsection (a)(5) [(a)(6)] of this section; or |
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(2) the advance of all the additional funds is for |
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reasonable costs necessary to refinance such debt or for a purpose |
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described by Subsection (a)(2) or (a)(4) [, (a)(3), or (a)(5)] of |
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this section. |
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(f) A refinance of debt secured by the homestead, any |
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portion of which is an extension of credit described by Subsection |
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(a)(5) [(a)(6)] of this section, may not be secured by a valid lien |
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against the homestead unless either: |
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(1) the refinance of the debt is an extension of credit |
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described by Subsection (a)(5) or (a)(6) [or (a)(7)] of this |
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section; or |
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(2) all of the following conditions are met: |
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(A) the refinance is not closed before the first |
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anniversary of the date the extension of credit was closed; |
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(B) the refinanced extension of credit does not |
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include the advance of any additional funds other than: |
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(i) funds advanced to refinance a debt |
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described by Subsections (a)(1) through (a)(6) [(a)(7)] of this |
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section; or |
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(ii) actual costs and reserves required by |
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the lender to refinance the debt; |
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(C) the refinance of the extension of credit is |
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of a principal amount that when added to the aggregate total of the |
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outstanding principal balances of all other indebtedness secured by |
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valid encumbrances of record against the homestead does not exceed |
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80 percent of the fair market value of the homestead on the date the |
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refinance of the extension of credit is made; and |
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(D) the lender provides the owner the following |
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written notice on a separate document not later than the third |
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business day after the date the owner submits the loan application |
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to the lender and at least 12 days before the date the refinance of |
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the extension of credit is closed: |
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"YOUR EXISTING LOAN THAT YOU DESIRE TO REFINANCE IS A HOME |
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EQUITY LOAN. YOU MAY HAVE THE OPTION TO REFINANCE YOUR HOME EQUITY |
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LOAN AS EITHER A HOME EQUITY LOAN OR AS A NON-HOME EQUITY LOAN, IF |
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OFFERED BY YOUR LENDER. |
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"HOME EQUITY LOANS HAVE IMPORTANT CONSUMER PROTECTIONS. A |
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LENDER MAY ONLY FORECLOSE A HOME EQUITY LOAN BASED ON A COURT ORDER. |
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A HOME EQUITY LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY |
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AGAINST YOU AND YOUR SPOUSE. |
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"IF YOU HAVE APPLIED TO REFINANCE YOUR EXISTING HOME EQUITY |
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LOAN AS A NON-HOME EQUITY LOAN, YOU WILL LOSE CERTAIN CONSUMER |
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PROTECTIONS. A NON-HOME EQUITY REFINANCED LOAN: |
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"(1) WILL PERMIT THE LENDER TO FORECLOSE WITHOUT A |
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COURT ORDER; |
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"(2) WILL BE WITH RECOURSE FOR PERSONAL LIABILITY |
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AGAINST YOU AND YOUR SPOUSE; AND |
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"(3) MAY ALSO CONTAIN OTHER TERMS OR CONDITIONS THAT |
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MAY NOT BE PERMITTED IN A TRADITIONAL HOME EQUITY LOAN. |
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"BEFORE YOU REFINANCE YOUR EXISTING HOME EQUITY LOAN TO MAKE |
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IT A NON-HOME EQUITY LOAN, YOU SHOULD MAKE SURE YOU UNDERSTAND THAT |
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YOU ARE WAIVING IMPORTANT PROTECTIONS THAT HOME EQUITY LOANS |
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PROVIDE UNDER THE LAW AND SHOULD CONSIDER CONSULTING WITH AN |
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ATTORNEY OF YOUR CHOOSING REGARDING THESE PROTECTIONS. |
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"YOU MAY WISH TO ASK YOUR LENDER TO REFINANCE YOUR LOAN AS A |
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HOME EQUITY LOAN. HOWEVER, A HOME EQUITY LOAN MAY HAVE A HIGHER |
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INTEREST RATE AND CLOSING COSTS THAN A NON-HOME EQUITY LOAN." |
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(f-1) A lien securing a refinance of debt under Subsection |
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(f)(2) of this section is deemed to be a lien described by |
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Subsection (a)(3) [(a)(4)] of this section. An affidavit executed |
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by the owner or the owner's spouse acknowledging that the |
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requirements of Subsection (f)(2) of this section have been met |
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conclusively establishes that the requirements of Subsection |
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(a)(3) [(a)(4)] of this section have been met. |
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(g) An extension of credit described by Subsection (a)(5) |
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[(a)(6)] of this section may be secured by a valid lien against |
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homestead property if the extension of credit is not closed before |
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the 12th day after the lender provides the owner with the following |
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written notice on a separate instrument: |
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"NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION |
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50(a)(5) [50(a)(6)], ARTICLE XVI, TEXAS CONSTITUTION: |
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"SECTION 50(a)(5) [50(a)(6)], ARTICLE XVI, OF THE TEXAS |
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CONSTITUTION ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY |
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IN YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU |
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DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, |
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THE LENDER MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION |
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PROVIDES THAT: |
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"(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF |
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EACH OWNER OF YOUR HOME AND EACH OWNER'S SPOUSE; |
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"(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE |
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MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES |
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OF ALL OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE |
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FAIR MARKET VALUE OF YOUR HOME; |
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"(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY |
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AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS |
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EXTENSION OF CREDIT BY ACTUAL FRAUD; |
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"(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY |
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WITH A COURT ORDER; |
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"(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 2 |
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PERCENT OF THE LOAN AMOUNT, EXCEPT FOR A FEE OR CHARGE FOR AN |
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APPRAISAL PERFORMED BY A THIRD PARTY APPRAISER, A PROPERTY SURVEY |
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PERFORMED BY A STATE REGISTERED OR LICENSED SURVEYOR, A STATE BASE |
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PREMIUM FOR A MORTGAGEE POLICY OF TITLE INSURANCE WITH |
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ENDORSEMENTS, OR A TITLE EXAMINATION REPORT; |
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"(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE |
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DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM |
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TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT; |
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"(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE; |
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"(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN; |
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"(I) (repealed); |
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"(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN |
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AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES |
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OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR |
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HOME; |
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"(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(5) [50(a)(6)], |
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ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME |
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AT ANY GIVEN TIME; |
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"(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT |
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EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT |
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PERIOD; |
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"(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A |
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LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE |
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THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR |
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CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU |
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RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY PROVIDED |
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AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS, |
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INTEREST, COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF |
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YOUR HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST |
|
YEAR, A NEW LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE |
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ONE YEAR HAS PASSED FROM THE CLOSING DATE OF THE OTHER LOAN, UNLESS |
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ON OATH YOU REQUEST AN EARLIER CLOSING DUE TO A DECLARED STATE OF |
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EMERGENCY; |
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"(N) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER, |
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TITLE COMPANY, OR AN ATTORNEY AT LAW; |
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"(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF |
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INTEREST AUTHORIZED BY STATUTE; |
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"(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS |
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DESCRIBED BY SECTION 50(a)(5) [50(a)(6)], ARTICLE XVI, OF THE TEXAS |
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CONSTITUTION; |
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"(Q) LOANS DESCRIBED BY SECTION 50(a)(5) [50(a)(6)], ARTICLE |
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XVI, OF THE TEXAS CONSTITUTION MUST: |
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"(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT |
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EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO ANOTHER |
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LENDER; |
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"(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY; |
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"(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE |
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BLANKS FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED IN; |
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"(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR |
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POWER OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN |
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A LEGAL PROCEEDING ON YOUR BEHALF; |
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"(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN |
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APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING; |
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"(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A |
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DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(5) |
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[50(a)(6)], ARTICLE XVI, OF THE TEXAS CONSTITUTION; |
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"(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER |
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WILL SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE |
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LIEN, WHICHEVER IS APPROPRIATE; |
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"(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING, |
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RESCIND THE LOAN WITHOUT PENALTY OR CHARGE; |
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"(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR |
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MARKET VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND |
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"(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND |
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INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER'S |
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OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS |
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PROVIDED BY SECTION 50(a)(5)(Q)(x) [50(a)(6)(Q)(x)], ARTICLE XVI, |
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OF THE TEXAS CONSTITUTION; AND |
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"(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT: |
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"(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW |
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MONEY UNDER THE LINE OF CREDIT; |
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"(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN |
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AMOUNT OF AT LEAST $4,000; |
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"(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, OR SIMILAR |
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DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT, TO OBTAIN |
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ADVANCES UNDER THE LINE OF CREDIT; |
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"(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED AND COLLECTED |
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ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED AND THE LENDER |
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MAY NOT CHARGE A FEE IN CONNECTION WITH ANY ADVANCE; |
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"(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN |
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ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80 |
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PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LINE OF |
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CREDIT IS ESTABLISHED; |
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"(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT ANY |
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TIME EXCEEDS 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS |
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DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY |
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NOT CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE |
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BALANCE IS LESS THAN 80 PERCENT OF THE FAIR MARKET VALUE; AND |
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"(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE |
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LINE OF CREDIT. |
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"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS |
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CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI, |
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OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE." |
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If the discussions with the borrower are conducted primarily |
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in a language other than English, the lender shall, before closing, |
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provide an additional copy of the notice translated into the |
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written language in which the discussions were conducted. |
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(h) A lender or assignee for value may conclusively rely on |
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the written acknowledgment as to the fair market value of the |
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homestead property made in accordance with Subsection |
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(a)(5)(Q)(ix) [(a)(6)(Q)(ix)] of this section if: |
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(1) the value acknowledged to is the value estimate in |
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an appraisal or evaluation prepared in accordance with a state or |
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federal requirement applicable to an extension of credit under |
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Subsection (a)(5) of this section [(a)(6)]; and |
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(2) the lender or assignee does not have actual |
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knowledge at the time of the payment of value or advance of funds by |
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the lender or assignee that the fair market value stated in the |
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written acknowledgment was incorrect. |
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(i) This subsection shall not affect or impair any right of |
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the borrower to recover damages from the lender or assignee under |
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applicable law for wrongful foreclosure. A purchaser for value |
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without actual knowledge may conclusively presume that a lien |
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securing an extension of credit described by Subsection (a)(5) |
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[(a)(6)] of this section was a valid lien securing the extension of |
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credit with homestead property if: |
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(1) the security instruments securing the extension of |
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credit contain a disclosure that the extension of credit secured by |
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the lien was the type of credit defined by Subsection (a)(5) of this |
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section [Section 50(a)(6), Article XVI, Texas Constitution]; |
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(2) the purchaser acquires the title to the property |
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pursuant to or after the foreclosure of the voluntary lien; and |
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(3) the purchaser is not the lender or assignee under |
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the extension of credit. |
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(j) Subsection (a)(5) [(a)(6)] and Subsections (e)-(i) of |
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this section are not severable, and none of those provisions would |
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have been enacted without the others. If any of those provisions |
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are held to be preempted by the laws of the United States, all of |
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those provisions are invalid. This subsection shall not apply to |
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any lien or extension of credit made after January 1, 1998, and |
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before the date any provision under Subsection (a)(5) [(a)(6)] or |
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Subsections (e)-(i) of this section is held to be preempted. |
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(k) "Reverse mortgage" means an extension of credit: |
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(1) that is secured by a voluntary lien on homestead |
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property created by a written agreement with the consent of each |
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owner and each owner's spouse; |
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(2) that is made to a person who is or whose spouse is |
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62 years or older; |
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(3) that is made without recourse for personal |
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liability against each owner and the spouse of each owner; |
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(4) under which advances are provided to a borrower: |
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(A) based on the equity in a borrower's |
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homestead; or |
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(B) for the purchase of homestead property that |
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the borrower will occupy as a principal residence; |
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(5) that does not permit the lender to reduce the |
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amount or number of advances because of an adjustment in the |
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interest rate if periodic advances are to be made; |
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(6) that requires no payment of principal or interest |
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until: |
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(A) all borrowers have died; |
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(B) the homestead property securing the loan is |
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sold or otherwise transferred; |
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(C) all borrowers cease occupying the homestead |
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property for a period of longer than 12 consecutive months without |
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prior written approval from the lender; |
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(C-1) if the extension of credit is used for the |
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purchase of homestead property, the borrower fails to timely occupy |
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the homestead property as the borrower's principal residence within |
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a specified period after the date the extension of credit is made |
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that is stipulated in the written agreement creating the lien on the |
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property; or |
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(D) the borrower: |
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(i) defaults on an obligation specified in |
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the loan documents to repair and maintain, pay taxes and |
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assessments on, or insure the homestead property; |
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(ii) commits actual fraud in connection |
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with the loan; or |
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(iii) fails to maintain the priority of the |
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lender's lien on the homestead property, after the lender gives |
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notice to the borrower, by promptly discharging any lien that has |
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priority or may obtain priority over the lender's lien within 10 |
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days after the date the borrower receives the notice, unless the |
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borrower: |
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(a) agrees in writing to the payment |
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of the obligation secured by the lien in a manner acceptable to the |
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lender; |
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(b) contests in good faith the lien |
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by, or defends against enforcement of the lien in, legal |
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proceedings so as to prevent the enforcement of the lien or |
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forfeiture of any part of the homestead property; or |
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(c) secures from the holder of the |
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lien an agreement satisfactory to the lender subordinating the lien |
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to all amounts secured by the lender's lien on the homestead |
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property; |
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(7) that provides that if the lender fails to make loan |
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advances as required in the loan documents and if the lender fails |
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to cure the default as required in the loan documents after notice |
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from the borrower, the lender forfeits all principal and interest |
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of the reverse mortgage, provided, however, that this subdivision |
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does not apply when a governmental agency or instrumentality takes |
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an assignment of the loan in order to cure the default; |
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(8) that is not made unless the prospective borrower |
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and the spouse of the prospective borrower attest in writing that |
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the prospective borrower and the prospective borrower's spouse |
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received counseling regarding the advisability and availability of |
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reverse mortgages and other financial alternatives that was |
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completed not earlier than the 180th day nor later than the 5th day |
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before the date the extension of credit is closed; |
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(9) that is not closed before the 12th day after the |
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date the lender provides to the prospective borrower the following |
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written notice on a separate instrument, which the lender or |
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originator and the borrower must sign for the notice to take effect: |
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"IMPORTANT NOTICE TO BORROWERS |
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RELATED TO YOUR REVERSE MORTGAGE |
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"UNDER THE TEXAS TAX CODE, CERTAIN ELDERLY PERSONS MAY DEFER THE |
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COLLECTION OF PROPERTY TAXES ON THEIR RESIDENCE HOMESTEAD. BY |
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RECEIVING THIS REVERSE MORTGAGE YOU MAY BE REQUIRED TO FORGO ANY |
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PREVIOUSLY APPROVED DEFERRAL OF PROPERTY TAX COLLECTION AND YOU MAY |
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BE REQUIRED TO PAY PROPERTY TAXES ON AN ANNUAL BASIS ON THIS |
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PROPERTY. |
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"THE LENDER MAY FORECLOSE THE REVERSE MORTGAGE AND YOU MAY LOSE YOUR |
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HOME IF: |
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"(A) YOU DO NOT PAY THE TAXES OR OTHER ASSESSMENTS ON THE |
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HOME EVEN IF YOU ARE ELIGIBLE TO DEFER PAYMENT OF PROPERTY TAXES; |
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"(B) YOU DO NOT MAINTAIN AND PAY FOR PROPERTY INSURANCE ON |
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THE HOME AS REQUIRED BY THE LOAN DOCUMENTS; |
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"(C) YOU FAIL TO MAINTAIN THE HOME IN A STATE OF GOOD |
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CONDITION AND REPAIR; |
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"(D) YOU CEASE OCCUPYING THE HOME FOR A PERIOD LONGER THAN |
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12 CONSECUTIVE MONTHS WITHOUT THE PRIOR WRITTEN APPROVAL FROM THE |
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LENDER OR, IF THE EXTENSION OF CREDIT IS USED FOR THE PURCHASE OF |
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THE HOME, YOU FAIL TO TIMELY OCCUPY THE HOME AS YOUR PRINCIPAL |
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RESIDENCE WITHIN A PERIOD OF TIME AFTER THE EXTENSION OF CREDIT IS |
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MADE THAT IS STIPULATED IN THE WRITTEN AGREEMENT CREATING THE LIEN |
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ON THE HOME; |
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"(E) YOU SELL THE HOME OR OTHERWISE TRANSFER THE HOME |
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WITHOUT PAYING OFF THE LOAN; |
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"(F) ALL BORROWERS HAVE DIED AND THE LOAN IS NOT REPAID; |
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"(G) YOU COMMIT ACTUAL FRAUD IN CONNECTION WITH THE LOAN; OR |
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"(H) YOU FAIL TO MAINTAIN THE PRIORITY OF THE LENDER'S LIEN |
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ON THE HOME, AFTER THE LENDER GIVES NOTICE TO YOU, BY PROMPTLY |
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DISCHARGING ANY LIEN THAT HAS PRIORITY OR MAY OBTAIN PRIORITY OVER |
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THE LENDER'S LIEN WITHIN 10 DAYS AFTER THE DATE YOU RECEIVE THE |
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NOTICE, UNLESS YOU: |
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"(1) AGREE IN WRITING TO THE PAYMENT OF THE OBLIGATION |
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SECURED BY THE LIEN IN A MANNER ACCEPTABLE TO THE LENDER; |
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"(2) CONTEST IN GOOD FAITH THE LIEN BY, OR DEFEND |
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AGAINST ENFORCEMENT OF THE LIEN IN, LEGAL PROCEEDINGS SO AS TO |
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PREVENT THE ENFORCEMENT OF THE LIEN OR FORFEITURE OF ANY PART OF THE |
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HOME; OR |
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"(3) SECURE FROM THE HOLDER OF THE LIEN AN AGREEMENT |
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SATISFACTORY TO THE LENDER SUBORDINATING THE LIEN TO ALL AMOUNTS |
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SECURED BY THE LENDER'S LIEN ON THE HOME. |
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"IF A GROUND FOR FORECLOSURE EXISTS, THE LENDER MAY NOT COMMENCE |
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FORECLOSURE UNTIL THE LENDER GIVES YOU WRITTEN NOTICE BY MAIL THAT A |
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GROUND FOR FORECLOSURE EXISTS AND GIVES YOU AN OPPORTUNITY TO |
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REMEDY THE CONDITION CREATING THE GROUND FOR FORECLOSURE OR TO PAY |
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THE REVERSE MORTGAGE DEBT WITHIN THE TIME PERMITTED BY SECTION |
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50(k)(10), ARTICLE XVI, OF THE TEXAS CONSTITUTION. THE LENDER MUST |
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OBTAIN A COURT ORDER FOR FORECLOSURE EXCEPT THAT A COURT ORDER IS |
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NOT REQUIRED IF THE FORECLOSURE OCCURS BECAUSE: |
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"(1) ALL BORROWERS HAVE DIED; OR |
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"(2) THE HOMESTEAD PROPERTY SECURING THE LOAN IS SOLD |
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OR OTHERWISE TRANSFERRED." |
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"YOU SHOULD CONSULT WITH YOUR HOME COUNSELOR OR AN ATTORNEY IF YOU |
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HAVE ANY CONCERNS ABOUT THESE OBLIGATIONS BEFORE YOU CLOSE YOUR |
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REVERSE MORTGAGE LOAN. TO LOCATE AN ATTORNEY IN YOUR AREA, YOU MAY |
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WISH TO CONTACT THE STATE BAR OF TEXAS." |
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"THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS |
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CONSTITUTION. YOUR RIGHTS ARE GOVERNED IN PART BY SECTION 50, |
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ARTICLE XVI, OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE."; |
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(10) that does not permit the lender to commence |
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foreclosure until the lender gives notice to the borrower, in the |
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manner provided for a notice by mail related to the foreclosure of |
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liens under Subsection (a)(5) [(a)(6)] of this section, that a |
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ground for foreclosure exists and gives the borrower at least 30 |
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days, or at least 20 days in the event of a default under |
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Subdivision (6)(D)(iii) of this subsection, to: |
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(A) remedy the condition creating the ground for |
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foreclosure; |
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(B) pay the debt secured by the homestead |
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property from proceeds of the sale of the homestead property by the |
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borrower or from any other sources; or |
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(C) convey the homestead property to the lender |
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by a deed in lieu of foreclosure; and |
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(11) that is secured by a lien that may be foreclosed |
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upon only by a court order, if the foreclosure is for a ground other |
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than a ground stated by Subdivision (6)(A) or (B) of this |
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subsection. |
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(q) To the extent that any statutes of this state, including |
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without limitation, Section 41.001 of the Texas Property Code, |
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purport to limit encumbrances that may properly be fixed on |
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homestead property in a manner that does not permit encumbrances |
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for extensions of credit described in Subsection (a)(5) or (a)(6) |
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[or (a)(7)] of this section, the same shall be superseded to the |
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extent that such encumbrances shall be permitted to be fixed upon |
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homestead property in the manner provided for by this amendment. |
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(r) The supreme court shall promulgate rules of civil |
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procedure for expedited foreclosure proceedings related to the |
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foreclosure of liens under Subsection (a)(5) [(a)(6)] of this |
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section and to foreclosure of a reverse mortgage lien that requires |
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a court order. |
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(t) A home equity line of credit is a form of an open-end |
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account that may be debited from time to time, under which credit |
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may be extended from time to time and under which: |
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(1) the owner requests advances, repays money, and |
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reborrows money; |
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(2) any single debit or advance is not less than |
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$4,000; |
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(3) the owner does not use a credit card, debit card, |
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or similar device, or preprinted check unsolicited by the borrower, |
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to obtain an advance; |
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(4) any fees described by Subsection (a)(5)(E) |
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[(a)(6)(E)] of this section are charged and collected only at the |
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time the extension of credit is established and no fee is charged or |
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collected in connection with any debit or advance; |
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(5) the maximum principal amount that may be extended |
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under the account, when added to the aggregate total of the |
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outstanding principal balances of all indebtedness secured by the |
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homestead on the date the extension of credit is established, does |
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not exceed an amount described under Subsection (a)(5)(B) |
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[(a)(6)(B)] of this section; |
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(6) (repealed); |
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(7) the lender or holder may not unilaterally amend |
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the extension of credit; and |
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(8) repayment is to be made in regular periodic |
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installments, not more often than every 14 days and not less often |
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than monthly, beginning not later than two months from the date the |
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extension of credit is established, and: |
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(A) during the period during which the owner may |
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request advances, each installment equals or exceeds the amount of |
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accrued interest; and |
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(B) after the period during which the owner may |
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request advances, installments are substantially equal. |
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(u) The legislature may by statute delegate one or more |
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state agencies the power to interpret Subsections (a)(4)-(a)(6) |
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[(a)(5)-(a)(7)], (e)-(p), and (t), of this section. An act or |
|
omission does not violate a provision included in those subsections |
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if the act or omission conforms to an interpretation of the |
|
provision that is: |
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(1) in effect at the time of the act or omission; and |
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(2) made by a state agency to which the power of |
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interpretation is delegated as provided by this subsection or by an |
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appellate court of this state or the United States. |
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SECTION 4. This proposed constitutional amendment shall be |
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submitted to the voters at an election to be held November 2, 2021. |
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The ballot shall be printed to permit voting for or against the |
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proposition: "The constitutional amendment providing that a |
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residence homestead is not subject to seizure or sale for |
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delinquent ad valorem taxes." |